tv Best of Bloomberg Technology Bloomberg December 23, 2017 11:00am-12:00pm EST
♪ rishaad: coming up, the year's most compelling conversations on business and finance in asia. jack ma shares his insight into alibaba and the future of business in china and around the world. >> i believe when trade stops, war starts. rishaad: haruhiko kuroda makes the case for stimulus in japan as other banks pull back. >> prices are not right. here, there's a kind of differential mindset. rishaad: australia's president and treasurer's goes into depth on diplomatic and economic goals. >> we look to beijing to bring the pressure to bear on the regime in pyongyang.
>> going forward, we see better days ahead. rishaad: the imf's christine lagarde looks forward to the year to come. >> this region, asia, is going to continue to be a global growth engine. rishaad: it is all straight ahead on this special edition of "bloomberg best." ♪ rishaad: hello and welcome, i'm rishaad salamat on this special edition of "bloomberg best." we look back at 2017 in asia, revisiting the year's most interesting interviews with newsmakers, policymakers, and leading figures in business. let's start with stephen engle's ' in-depth conversation with alibaba's jack ma. we were granted rare access to
him in his headquarters in china as the company's celebrated its 18th birthday. alibaba has enjoyed massive growth in 2017 and a rapidly evolving ecosystem of chinese technology companies. jack ma spoke with stephen engle about competition and regulation in this new environment. >> the speed of the internet era oftentimes blurs the line of regulation, and you push the boundary, push the boundary, and then regulators overreact or whatever. how do you stay ahead of that and also not overstep your boundary? >> we always step ahead of the regulators. we have to. otherwise, we go nowhere. they say, hey, wait a minute, my job is to regulate, my job is not about innovation. my job is not to improve other people's life, that is your job. it is the painful process that alibaba is learning. >> how have you stayed close to
the fire without being burned? >> we are very careful. when we are young, it's ok. now we are big. we probably regulate ourselves much more stricter much more, , than the regulators. today, we have more than half a billion people using us. we have such huge transactions. anything wrong. so we have to discipline ourself much more. but we also have to let the regulators -- the policy is important. >> have you faced resistance in china for what you are doing? >> i recently interviewed -- we all know about his comments about the internet economy destroying manufacturing and a drive to zero. >> do you think there is an old god in china that does not quite understand the new economy? >> we are having this kind of resistance in the past 18 years
almost every day. we see people like him a lot. but, you know, this is the evolution, the revolution of the technology. people like these old tycoons in the old economy, in the early days, they destroyed a lot of lower-level companies. we are helping manufacturing. we sold more than $500 billion u.s. dollars products last year, and 70% of them were helping selling the manufacturing. because we don't produce. without us, these 70% of the $500 billion manufactured products never be able to reach the consumers. >> will you facilitate reform at the state-run enterprises from the outside? because the vested interests want to keep the status quo. >> we are pushing that. this is why a lot of banks don't like us in china.
we're not necessarily interested in buying the banks to change it, because of us chasing them around, they reformed the china banks, which really react quickly. these banks change their services so fast. they put so much resources on the technology, on serving the people better. you don't have to buy a bank and change one bank when you are pushing them and chasing them around. when a tiger is following you, you can run much faster. rishaad: jack ma left no doubt in 2017 that alibaba's ambitions are grand and global. hear more from his exclusive interview with stephen engle on the topic of globalization. >> i think the next 80 years, the globalization will be much better, because of the internet. because this is our revolution. , -- we are making sure that a
small business can benefit from the, and i think 80 years is enough for us to improve globalization instead of killing globalization. i believe when trade stops, war starts. >> what is your u.s. strategy right now? >> we never changed changed our u.s. strategy. we want to help small and medium-sized companies sell to china and asia. we don't want to go through u.s. and be the local e-commerce company, which i think amazon, ebay, so many nice, interesting e-commerce companies all over the usa. >> you don't want to take on amazon doing what they are doing? >> no, no. >> you talked about the coming winter when you listed alibaba.com, and sure enough, the winter came pretty quickly. we saw the collapse of lehman brothers and the collateral damage. i was also watching your progress through the tech bubble and that bursting. you have had these challenges
that wiped familiar names off the board. are we facing a similar kind of tech bubble right now, with these billion-dollar unicorns and inflated tech scene? are there any similarities? >> no, not that much. i think the challenge at that time, a lot of people did not understand how powerful the internet is. how to do internet the right way. and whether internet can sustain, so people just jump in and start doing it, and a lot of people have crazy ideas, they don't know how to operate, and does not know how to make their dream come true. but today, everybody knows the internet is very powerful, it will change human history. also i think the infrastructure , of the internet, the infrastructure technology, is much better than 10, 15 years ago. so if you are not that greedy, if you are not that stupid and
crazy, it's easy to survive today. rishaad: that was alibaba founder jack ma, speaking exclusively with stephen engle. one of the most fascinating interviews of 2017. still ahead on the year in conversation, a discussion with jamie dimon about the future of reform in china. >> you can predict the future. 20 years ago much easier than you can predict the next 12 months. rishaad: and 2017 was another year of unconventional monetary policy in japan. up next, the bank of japan governor haruhiko kuroda gives some reasons he is still standing fast on stimulus. good, but i do not think 4% growth can be maintained. rishaad: this is bloomberg. ♪
rishaad: this is "bloomberg best," i am rishaad salamat. with prime minister shinzo abe cementing his parliamentary majority in the snap election, 27 concludes on a hopeful note for the program known as abenomics, and haruhiko kuroda has confirmed his commitment to accommodate monetary policy. earlier this year with , geopolitical risk rising and the yen strengthening, the course wasn't so certain. kuroda addressed those concerns in an exclusive interview with francine lacqua. >> this is, again, a difficult issue. certainly in the past whenever we had some geopolitical risks rising, yen appreciated, making our policy even more difficult. but at this stage, i don't know.
because exchange rates can move depending on many factors, not just geopolitical risk, but some other kind of development. i can't say anything about the exchange rate movement, if geopolitical risks further escalate. i don't know. francine: help me understand, if yen goes higher from here, does it hurt your inflation forecast? >> as you may know, our inflation forecast is based on the assumption that the exchange rates will not move much upward or downward. so if the yen depreciates, then of course inflation rates could rise, and if yen appreciates, inflation rates could decline.
that's true. but as i can say, our information forecast is based on continuous improvement in the labor market, continuous improvement in output gap which , is quite certain. 1.5% growth, the economy is doing well. the labor market will continue to tighten and wages would rise and prices will rise. so i agree that inflation could affect the rate in the short-term but basically we see , that inflation rates will reflectingoing up, improved capital. francine: you have done more than any other central bank
governor to try to get inflation up. when we spoke six months ago, you went outside the toolbox. are you still confident that you can achieve 2%? there's no doubt? even if yen goes higher? >> as i said, our forecast in the sense that we would reach 2% target around fiscal 2018 is based on the exemption that the exchange rates would not move, and so on and so forth. so that exchange rate appreciates, of course timing , could be slightly delayed, and if exchange rates depreciate, the timing could be earlier than otherwise. but the basic trend is toward 2% in a gradual amount.
-- a gradual manner, reflecting the improving environment. francine: so would it be fair, governor, to say that at the moment you could either ease or lighten? >> i think at this stage we would maintain the current regulatory monetary policy stance. rishaad: when the world's central bankers came to jackson hole in august, the federal reserve in the european central bank were both looking ahead to tightening. itsfed planning to reduce balance sheet, and the ecb devising a qe exit strategy. governor kuroda sat down with kathleen hays and explained why his nation still needed stimulus to reach its goals for growth. >> in the u.s. and europe, inflation rate is actually close to the target, close to 2%.
but in japan, the inflation rate is still 0.5%, far away from our 2% target. so there is some difference between u.s., europe, and japan. rates are not rising so fast, that is true. mostly in japan. but prices are not rising. here, there is some kind of differentiation in mindset. strong among business leaders, as well as global leaders. they tend to be cautious in raising prices. what companies are doing is they are heavily investing, they are saving in equipment and so on and so forth, and also they
are changing a previous model so as to reduce labor content. by so doing, this wage increase, the labor cost has not been rising. they're not required to raise prices. kathleen but they are doing : well. gdp growth six quarters in a row. that hasn't happened in japan in years. you are succeeding on growth, and maybe something has changed to the degree that -- does inflation matter so much? japanese like low inflation if you have got the growth. >> but -- two things. good, but i dois not think 4% growth can be sustained. around 2% growth, we can attain this fiscal year, and even in the next fiscal year, grow to 2%, may be possible to attain.
but 4% growth is somewhat unusual. but i'm quite sure that this 1.5% to 2% growth can be attained in the coming year. now, that is one point. second point, yes, prices are not rising so fast, but as you can imagine, if we satisfy with lower than 2% inflation, we may be faced with a recession. of course, it's almost impossible to address the situation with traditional monetary policy of reducing short-term -- because if we take the inflation rate as low as 0.5%, the interest rate continues to hold. so that's a necessity, to have
some sort of policy room for the monetary authority. kathleen what do you mean by : policy room? crisis, the lehman federal reserve as well as the european central bank could reduce short-term interest rates by about 4%. but at that time, japanese interest rates were already zero, so there is no way to address the situation by way of traditional monetary policy. huge had to resort to quantitative easing. so i think we need to attain 2% inflation target.
if it is kind of the global standard now. kathleen i'm asking you, maybe : global central banks have to rethink this. everything is hitting inflation targets, and the world has changed, maybe. >> there's that argument, yes. among economists. but still, i think the federal reserve and ecb, aiming at to 2%ing 2% or as close inflation target as soon as possible, and that, i think is quite reasonable. so the bank of japan, too, aims at achieving a 2% price target. rishaad: much more ahead as we revisit the top interviews from bloomberg's asia coverage in 2017. up next, bloomberg editor in chief john mickelthwait talks with wang jianlin in davos. and later in, more conversations
♪ rishaad: you are watching a special edition of "bloomberg best," highlighting conversations from the year 2017 on asian business and finance. i'm rishaad salamat. let's flash back to january, at the world economic forum in davos. china's president xi jingping defending globalization in the opening session, while in washington, u.s. president-elect then donald trump was promising to implement protectionist trade measures. it is against this unique background that john mickelthwait spoke on stage with one of china's most influential business leaders, wang jianlin.
john: congress is looking at the issue of chinese investment in hollywood. how do you look at that? to you think this is just protectionism, or do you think there is -- do you understand something about what the americans are saying? >> [speaking mandarin] this is certainly part of protectionism. so far the u.s. economy has not launched any censorship or control of the entertainment. we have only done it to manufacturing and defense industries. but there are congressman writing letters saying there will be more examination and control of investment into entertainment. it will be set back, but it will be about protectionism emerging in the u.s. president xi said yesterday that it would be bad for both parties, no winners.
the investment into u.s. is a good thing. the main marketing of english language films out of the u.s. is actually china, not anywhere else. a major source of income, the growth part, the new growth part will have to come from china. in india, there is a large market, but there is hardly any growth, nor in any countries. the main market is the english language films in china. so if china were to retaliate, it would be a battle of both parties. i do not wish to see that scenario materializing. john: we have asked the chairman of the film association of the u.s. to pass a message to mr. trump. let's leave the entertainment industry alone. no more, please. john: do you think there is some way in which entertainment is different?
you talked earlier that the chinese have limits on the number of american films that come in. is the answer for both sides to have no limit, or do you think there is something about entertainment where people should be able to limit what comes in, what goes out? >> [speaking mandarin] well, in china, although we say there is control, there's also different categories of production, purchase of rights. there are different channels into china. some chinese investment in there will be no backtalk in the u.s. more and more companies are doing coproduction. for example, they will allocate a few films to be coproductions. that is a way of bypassing control.
but i would like to say that the u.s. government, if it were to control investment, that would be a bad thing. john: very quickly, if i was a republican congressman, what would you say to encourage me to trust you to be able to run a big part of hollywood? >> [speaking mandarin] it is still a company ran by americans. we do not interfere with the content. i just want profit. [laughter] rishaad: that interview took place just a few days into 2017. later in this program, christine lagarde explains her outlook for asia in 2018. and coming up, it has been a complex year for australia, politically and economically. we have a conversation with prime minister malcolm turnbull, next. >> the relationship between the united states and australia is as strong as any relationship
rishaad: i'm rishaad salamat, and this is a special edition of "bloomberg best," wrapping up 2017 in asia by playing back the year's top interviews. let's turn now to australia. bloomberg's haidi lun sat down with an exclusive conversation with prime minister malcolm turnbull at an extremely sensitive geopolitical moment in early june, with tensions mounting in asia over north korea's nuclear conduct, and questions arising about australia's relationship with the united states and president donald trump. p.m. turnbull: north korea's conduct is reckless, dangerous, and becoming more so. china has the greatest leverage
over north korea, and with the greatest leverage comes the greatest responsibility, so we will do our part with sanctions, of course, but we look to beijing to bring the pressure to bear on the regime in pyongyang, to bring it to its senses so that is ceases threatening the peace of the region with its reckless conduct. haidi: the recent events seem to portend of a seismic shift when it comes to global alliances, angela merkel suggesting that german cannot continue to rely on the u.s. and u.k., that europeans must take charge of their own destiny. if such an alliance, steeped in tradition and deep friendship, the post war lines can be looking so fractured at the moment. what does that mean for australia? you say the u.s. and australia have shared values and the special relationship, but do you really?
p.m. turnbull: well, of course we do, and our alliances stronger than ever. the australia-u.s. alliance is more important than ever. as president trump and i demonstrated when we were together on the uss intrepid a little while ago, the commitment to our two nations, based on our history, based on our shared values, based on our mutual interests, is stronger than ever. haidi: is there a concern, though, that president trump has proven himself to be irrational at times, erratic, when it comes to policy decisions, and at other times transactional? is that level of good faith between australia and the u.s. something that can still be relied on? p.m. turnbull: the relationship is in the very best of health. the relationship between the united states and australia is as strong as any relationship could be. it is based on history, shared values, common interest, the
closest possible engagement at every level. defense, political, economic, business, people to people, family. it is the closest possible relationship, and it gets stronger all the time. haidi: scotland yard was forced to temporarily suspend intelligence sharing with the u.s. after these reports following manchester, that information had been leaked. this also follows on from the u.s. president reportedly sharing confidential information with senior russian officials. has australia sought reassurances that any intelligence shared would remain confidential? p.m. turnbull: well, the intelligence relationship, as you know, between australia and the u.s., is also intensely close. it is part of the arrangement. we have every confidence in the confidentiality of the intelligence we share with our friends in the united states, just as they have the confidence
in what they share with us. you thatt to say to intelligence is more important forever, -- important than ever, in particular against terrorism. it is a global phenomenon, a global threat of islamist terrorism extends from europe to the middle east to asia to the americas to australia. so the sharing of intelligence, not just between the five eyes, but to all nations committed to defeating the scourge is more important than forever. haidi: have you sought assurances from president trump? p.m. turnbull: i can assure you, we are assured, always assured, of the strongest security and the strongest confidentiality as between our intelligence services. it is a relationship of many decades standing, and one which is, again, as rocksolid and part of the alliance. rishaad: in october, bloomberg's kathleen hays delved deep into the issues affecting the
australian economy in an interview with scott morrison and the imf before meeting in washington, d.c. >> with forecasting australian growth 2.75% this year, and to see that grow the year after what we have seen in our , employment numbers, what was seen in rising business confidence and conditions, let us all to continue on that view. there have been some weather events in australia, tragically cyclones, these kinds of things that can disrupt that production, which has impacted growth last year. but going forward, we see better days ahead. >> what is your forecast for the year? >> we are looking at two or three quarters for the real this year and 3% next year. you did have weaker retail sales in 2010 recently. are you getting a little nervous that helpful finances are getting pinched?
>> growth has been flat in australia for several years now, that is coming off 100 year mining investment. we had wages at that high-level, particularly when you look at consumer purchasing power and the exchange rate during the boom. that's tiled off, but we are now expecting it over the next three or four years to return to a normal transition of seeing wages grow in line with productivity growth. we are taking steps with corporate taxes, increasing investment, all of that is contributing to a much more optimistic investment seen s --cene. >> wages, that is a sticky problem for many countries around the world, from the u.s. to japan to the euro area. tight labor markets. wages are not growing much. why is it going to be different in australia? what are you going to do? >> two things. one is our level of unemployment is 5.6, higher than the united states, but well below the natural rate. full employment would be around
5%, so there is still some spare capacity in our labor market, but that has been coming down. we have had the strongest six-month growth in 40 years, until the end of july. we are seeing good growth in the labor market, running at 2% per year, 10 times what it was when we first came to government four years ago. the other point is this, the point it was making about coming off the tail end of the mining investment boom. in australia, a bigger economic events was not so much the global financial crisis that swiped the northern hemisphere. it has been coming back off that rather strong peak in mining investment. in terms of trade go 30% on that peak. despite this, australia has grown for 26 years, the longest run of recorded economic growth of any nation in the world. we have a good growth story and the fundamentals remain in place. >> but one of the criticisms, or at least observations, about the
australian economy is that it is very reliant on commodities. there has to be a transition made. presumably the leadership would , have to come from the government. what are you doing about that? >> i talked about the public investment. we had public investment in june up 9%, at $75 billion announcement. new airports, the largest pumped hydro storage project in the southern hemisphere is going on now as we speak. there is a large public infrastructure program. ofhave got our first tranche the tax plan enterprise through which is cutting into corporate , taxes, particularly small to medium-sized businesses. we have the biggest recapitalization of our defense forces since the second world war, which has been doing wonders for our supply chain and our advanced manufacturing. service industries, tourism, education, age care, human services, that is where all the growth. medical services, that is fading
into the export market into places like china, japan, and south korea where we have strong agreements, as well as here in the united states. rishaad: still to come on this special edition of "bloomberg best," jamie dimon applauds the way in which china and the u.s. are working through their differences. jamie: sit down, talk about the issues you have. there are serious issues on both sides and you do something intelligent about it. rishaad: and christine lagarde salutes china's effort to rein in debt. >> the treasury department in china are listening and they are , clearly making decisions and taking action. rishaad: this is bloomberg. ♪
was china's progress toward financial reform and a more open economy. the belgian road initiative was just one move toward globalization but investors and , executives both inside and outside china sea much more to do -- see much more to do. here's what some of them had to say about doing business in china during the past year. >> european elections on the way, brexit of course, the u.k. elections, french elections, german elections. how much of that is factored into your strategy? how much of that is impacting the choices of chinese investors? jamie: we haven't really seen a huge backlash against foreign investment. -- >> we haven't really seen a huge backlash against foreign investment. for example, even brexit has not made much of a dent in terms of foreign investment. the british government still welcomes foreign investment as well.
in some ways, i do not see that will happen in france or germany. we are looking at those opportunities. what is of concern to us is the u.s., although i think in the last month or so that concern has been eased somewhat. the potential of a trade war, obviously, is deeply concerning. tom what do you see as the key : risks this year for china's economy? >> i think it's the pace of deleveraging. the last two or three years, financial risk is probably the new risk in the system. that partially explains the rationale on why china is not opening up the capital markets as quickly as investors would like to see because , fundamentally the system is just not ready. ratio isll leverage very high, as we know.
we were talking about probably over 250% gdp. china, if this point, has been given a huge amount of domestic savings. china can clearly deal with it in the short-term, but the leverage ratio not be increasing anymore. >> you said you think there is -- tom you said you think there : is too much money into the tech sector. are you suggesting that there are bubbles and china's tech sector, and if so, where? >> it's everywhere. it's not one particular area. i'm talking about internet in general. especially in the last five, six years. you see a tremendous amount of money poured into the market, whether it is from foreign funds or local funds. it's too much money. that is why, whenever a new for example,ed, live streaming, for example, a news app, for example, the
shared economy like airbnb and uber, those different models -- not like dozens of companies being created, it is like hundreds of companies being created. and in theory, these companies will never be successful, but everybody, whenever they have a new concept, and they think it will work, they don't want to miss it. so there's a lot of money pouring into new companies and new businesses. the result is that in huge competition in terms of market share, to get bigger. so a lot of competition is irrational. how do you think the country can mitigate its dependence on overseas energy supplies? >> [speaking mandarin] on one hand, chinese oil and gas companies like us must continue to play the role of domestic oil
exploitation. on the other hand, we need to speed up our efforts in collaborating with resource rich countries to jointly develop assets in order to replenish our country's ever growing demand for oil and gas. in this way, we can balance our heavy reliance on imports with better use of foreign resources. >> [speaking mandarin] we are aiming to enter the u.s. market in 2019, and this is a very crucial move. at the current stage, our internationalization process has just taken off. we have laid down all the groundwork, and carried forward our car sales and service operations in 14 different overseas countries this year. entering the u.s. market will be a huge breakthrough for guangzhou, because if we want to reach far in the grand path of globalization, establishing our
brand in the u.s., and winning trust of american consumers will have extraordinary symbolic significance to us. >> i have to ask about the name, because you obviously chose the name a long time ago, well before donald trump became president. he's a controversial figure to say the least. is it a positive for your branding, or is it a drawback for your branding? >> [speaking mandarin] we will definitely choose a name that american consumers are totally comfortable with. if american consumers think our model's name is too similar to a president and therefore have mixed feelings about our product, we will then pick a new name. >> you could predict the future 20 years ago much easier than the next 12 months. 40 years from now they will house 35% of the fortune 3000, and we should build for that. they made huge progress in
reforms, finance reforms, market reforms. those will have tough times and we should understand that. it is true for every single country. i'm very comforted by the fact that when president xi and president trump met, they put the rhetoric aside and came up with a comprehensive economic dialogue, a continuation from before. they announced that they want a small trade deal of 10 items and , they will have another one after 100 days, maybe after a year. that shows dialogue, conversation, ongoing dialogue -- the way it should be done. sit down, and talk about the issues you have. there are serious issues on both sides and do some intelligence. , >> are you happy with the pace of reform opening up, or are you patient? jamie: we are very patient. i obviously want it tomorrow, right? but obviously they have to look at it, so they won't to do what we want.
that we have had good conversations with chinese officials. . they understand. again, we have to make our case the china. they need to do what's right for china, we need to have it good for jpmorgan. >> how about reform in the foreign exchange market? they just added this countercyclical factor in the daily fixing mechanism. some would say that this is exerting more control at a time when they are talking about relaxing those controls. how do you see it? jamie: i think this is all blown out of proportion. it's not going to flow like other currencies. they do stuff with the currency and the marketplace, but they are making it to go up, so all the rhetoric is about make it go down to have a trade benefit, a trade advantage over the trade partners, and that just not is not -- that is just not the truth. we worry about all the trade partners, and overtime, to become a convertible currency that is always a way you have to , be able to freely buy and sell
r&d, and you can't do that here. bem not saying it would possible for them to do it overnight. i think they are blowing it out of proportion, it is part of capital controls. until they have full convertibility, they will have to have some form of that. >> the timeframe -- five years ago, i heard it was three years ago. it is probably 10 years out. jamie: five to 10 years out, yeah. they created a real bond market, they have the bond connect, the stock exchange connect. they've created more investment products, they have opened up businesses, i am talking about over five to 10 years. that is what they need to do. they need to take it to the next level. if you look back, they have full market reform. ♪
♪ rishaad: welcome back to this special edition of "bloomberg best." summing up the year in conversation with a focus on asia. the international monetary fund has issued an encouraging outlook for asian growth in anticipating the stronger than anticipated forecast in 2017 will continue. so what's behind the forecast? in november, haslinda amin went into detail on this topic in an exclusive interview with the imf managing director, christine lagarde.
ms. lagarde: the global economy is recovering. we are moving from 3.2% last year, 3.6% this year, 3.7% next year, catching up with pre-financial crisis growth. this region, asia, is going to continue to be the big, global growth engine that it has been, and compared with this average of 3.6%, asia will be generating at least 5.5%. so that tells you a lot about the role played by the region in global economic development. haslinda: do you see evidence of inflation in this part of the world? ms. lagarde: it's a balance situation. you have countries that are currently at relatively low inflation levels, and where we believe that monetary policy must continue to support recovery and have an impact on price levels. but there are countries where
inflation is still at crisis, -- quite sensible and good levels. haslinda: having said that, do you see several banks in asia targeting, in 2018? ms. lagarde: monetary policy will be tightened in those countries where the economy is picking up sufficiently fast, and where inflation is rising. this is going to be the case in the u.s. it is happening, very gradually, very smoothly, and we hope that it continues at that pace without any abruptness, without massive capital movement as a result. the u.k. has just recently raised interest rates again. but in this part of the world, i'm not sure i'm seeing it right away. haslinda: we saw a big bang moment for china yesterday, when it opened up further its financial sector. is it more significant, or is it
more symbolic? ms. lagarde: i was telling you earlier that services have to be better integrated and more open to trade and exchange. that is one indication. financial services in china were fairly constrained, restricted with quite a lot of barriers to foreign direct investment. the fact that it is considering to remove at least partially those barriers, to move above the threshold of 50%, then gradually to eliminate those thresholds, that is an indication of two things, openness and better strength and confidence in their own system. because very often, barriers and protections are established when there is not enough confidence, when the sector is just developing and not yet grown
enough and maturing enough to take external contributions -- competition. i think it is a very good development. it's clearly phased in overtime. we don't have an exact timeline of when it is going to start. but it's a very positive development. haslinda: the imf recently upgraded its forecast for china. why isn't the imf more critical of china when it is taking the path that could lead to a financial crisis? ms. lagarde: we have raised with china the issue of the very fast development of credit, and our partners in china, the pboc leadership in particular, the treasury department in china are listening, and they are clearly making decisions and taking actions in order to rein in credit and avoid that growth be fueled predominantly by
expensive credit to the economy. hopefully they are going to continue doing that in order to avoid financial crisis. rishaad: that wraps up our special edition of "bloomberg best." we hope you have enjoyed these conversations from bloomberg tv's coverage of business and finance in asia during 2017. we look forward to bringing you more analysis, news, and interviews in the year ahead. thanks for watching. i'm rishaad salamat. this is bloomberg. ♪
♪ >> coming up on "bloomberg best" -- the most compelling conversations on finance and europe. the back-and-forth progress of rex it sparked constant debate. >> i want a free trade agreement with the european union. >> the situation after brexit would be worse for the u.k.. nejra: facing political turbulence. >> >> we need more vision, less bureaucracy. >> we can only risk sharing if we have the instruments to implement. nejra: it has been a year of transformation. four major banks. >> the buy word is long-term sustainability.